New Brunswick moves to protect innocent co-insureds

New Brunswick tabled amendments to the province’s Insurance Act Wednesday to protect innocent co-insureds in cases of intimate partner violence and property damage.

Most home insurance policies exclude payment for loss or damage caused by an intentional or criminal act by any person insured by the policy. The exclusions can be invoked against innocent co-insureds in the context of separation, divorce or domestic violence if a spouse deliberately sets fire or causes damage to the property. Some insurance companies pay notwithstanding the exclusion.

Proposed amendments to the Insurance Act, developed in partnership with New Brunswick’s Office of the Consumer Advocate for Insurance, the Financial and Consumer Services Commission and the Women’s Equality Branch, would prevent insurance companies from using exclusions to deny coverage in such cases. The amendments would allow innocent co-insureds to receive their share of compensation.

“Domestic abuse victims are particularly vulnerable when their partner damages or destroys the home,” New Brunswick’s Finance Minister Cathy Rogers said in a government news release announcing the proposed amendments. “Increasing access to services and supports for women victims of intimate partner violence is an area of focus in the New Brunswick Family Plan report on advancing women’s equality. This is just one of the changes we are making to address the barriers people face when trying to stay safe when there has been abuse in a relationship.”

The province’s consumer advocate for insurance, Michèle Pelletier, said her office was pleased with the government’s move. “This new amendment will prohibit insurers from relying on the exclusionary clause to prevent innocent co-insureds from receiving compensation for their interest in the property. Other provinces had already amended their acts. New Brunswick consumers needed legislative protection.”

The move brings New Brunswick in line with other provinces that have introduced protections for innocent co-insureds, including British Columbia, Alberta, Saskatchewan, Manitoba, and Quebec. In these provinces, the amount paid out is determined by the innocent co-insured’s proportional interest in the damaged property, the Insurance Bureau of Canada (IBC) states.

Insurers are supportive of the move to protect innocent co-insureds. In early 2017, IBC called on its member companies to voluntarily align their policies with other jurisdictions offering protections for innocent co-insureds. “While we support the legislation in New Brunswick, we’d note that insurers have been offering these protections since the spring,” IBC told Canadian Underwriter.

“A gap in insurance protection for some Canadians has recently been highlighted through media reports,” IBC president and CEO Don Forgeron said in a statement addressing the issue in May 2017. “These are tragic stories and insurers can take immediate action to close this gap.”

An Ontario Ministry of Finance spokesperson, Scott Blodgett, told Canadian Underwriter that changes have been proposed through amendments of the Insurance Act in the Ministry of Finance’s Fall bill which has passed second reading and has been referred to the Standing Committee on Finance and Economic Affairs for Public Hearings. The bill will be debated in clause-by-clause on Dec. 11 and is expected to be referred for third reading later that week.

If passed, the new rules would take effect as soon as the Insurance Act receives proclamation.